In the first minutes of a federal court hearing Tuesday, U.S. District Senior Judge James Moody told attorneys he wasn't going to order a state-supervised audit of East Chicago's finances, as the Indiana Attorney General's Office was asking. But his stance may have changed.

Following five hours of testimony and arguments in the civil racketeering case, Judge Moody realized the scope of the action being proposed in the suit against former Mayor Robert Pastrick and top aides - mainly six Pastrick political allies now known as the Sidewalk Six - who've been found civilly liable for running a corrupt enterprise.

Arguing on behalf of the Indiana Attorney General's Office, Chicago attorney Patrick M. Collins - who is acting as a special deputy attorney general - tried to convince Judge Moody that Pastrick and James Fife III could be held liable for more than $100 million in the case targeting the years of corruption that lingers in some form today.

Aside from the sidewalks-for-votes money used in the 1999 primary election, the suit also focuses on the Second Century and the Foundations of East Chicago, for-profit and non-profit recipients, respectively, of casino money. Both are embroiled in ongoing state court litigation as the attorney general and current East Chicago mayor fight to get those organizations to publicly disclose what the casino cash was used for during the Pastrick administration.

In a memorandum for injunctive relief filed June 2, the Attorney General's Office proposed that the State Board of Accounts review and report to the court what the full economic damages have been from the Pastrick corruption. The audit would assess the current financial conditions of East Chicago, the amounts and purposes of casino funds disbursed, and any other structural or systematic problems in the city, the brief stated.

As the hearing opened Tuesday, Judge Moody said he'd reviewed the brief and wasn't going to order an audit because he didn't find enough legal justification, that he wasn't convinced the Attorney General's Office could do it on its own accord, and that he didn't see it justified at such a late stage in this case.

But Collins argued that the start of the remedy phase was the only time that part of the remedy could be used, not during the trial preparation, and that any testimony at trial also could be used in the damages and remedy phase.

The state called five witnesses, including the former city controller Ed Maldonado, who's serving 130 months in prison after his conviction in the criminal Sidewalk Six case. He testified that Pastrick and Fife headed a political machine that misguided millions of dollars; while he signed the checks and knew of the activity, they were ultimately the ones leading the corruption. A state Board of Accounts auditor testified that she'd reviewed the city finances before; however, because casino monies were diverted to for-profit and non-profit trusts or organizations, she couldn't fully see the scope of the Pastrick activity. A former Internal Revenue Service agent and two other city officials also testified about how East Chicago is still recovering from the Pastrick legacy.

"The Pastrick political machine essentially took over the city and ruled it for personal and political gain of Mayor Pastrick," attorney Joel Levin said for the state during closings. "The city was the epitome of a political machine, and politics influenced this city in every way, shape, and form. But Your Honor can do something to unwind that legacy."

Notre Dame University Law School professor G. Robert Blakey, a racketeering law expert who helped draft the Racketeer Influenced and Corrupt Organization Act about four decades ago, told the judge that this is a case of first impression nationally. The judge is basically able to do anything he wants as allowed under the expansive RICO statute, Blakey said. He asked the judge to order a forensic audit - one that goes beyond the numbers and includes interviews and extensive research - to determine how the casino money was used under Pastrick's agreement. That could reveal the extent of damages that should be repaid to taxpayers, he said.

Blakey urged the judge to consider all remedial options possible under the RICO statute, including the use of liens, a trustee, constructive trust, or asset forfeiture. Typical antitrust cases have used inspection audits, and that could be ordered here also, he said.

"There's something about a federal court," Blakey said. "People pay a lot of attention to a federal court order. What we're asking is that you do justice ... for the people of East Chicago."

While Pastrick didn't appear Tuesday, his attorney Michael W. Bosch represented him in court and Fife represented himself. Neither presented specific arguments, but they did question specific aspects of the state's case during witness testimony.

Bosch said during closing the state has given the former mayor "a free pass," and that Pastrick should be held responsible for nominal damages.

"You get a buck," he said. "Triple that, you get three bucks."

Attorneys have until June 22 to file their findings of fact and conclusions, and Judge Moody will then consider what happens next.

More coverage about this case can be found in the June 10-23, 2009, issue of Indiana Lawyer.

Michael Hoskins joined Indiana Lawyer in May 2006 and mostly covers the state and federal court systems. He’s received awards from the Indiana Chapter of the Society of Professional Journalists for his work covering the state's juvenile justice system, the federal immigration court system, wrongful conviction issues, and long-running lawsuits regarding prison conditions.

He came from the Daily Journal in Johnson County, where he was a general assignment reporter covering courts and legal issues. Before moving to Indiana in 2004 from southeast Michigan, Hoskins freelanced for the Detroit Free Press and worked for the Spinal Column Newsweekly after graduating with a bachelor’s degree in journalism from Oakland University in 2001. He currently lives in Greenwood with his wife, Susanne, and volunteers with the Juvenile Diabetes Research Foundation.